Marijuana should be legalized because the legalization will bring economic benefits, such as tax revenue, creation of new jobs, and money which was used to fight marijuana smokers also can be saved.
Marijuana is a drug that has been around for some time; it is a completely natural, typically unprocessed narcotic that has an incredible appeal to millions of people as a recreational drug. However, the prohibition of marijuana has left a giant missed opportunity for the American economy. Instead of taking advantage of this bumper crop, its illegal status has made otherwise normal, friendly people to seek out the drug on their own, not paying a single cent to the federal government. Despite the fact that it could earn the American economy millions of dollars a year, its legalization is still opposed. In this paper, we will examine the reasons why the legalization of marijuana would be a great boon to the future prosperity of the United States from a financial standpoint.
The question of whether to legalize marijuana or not in America has been in dispute for many years. Even though Congress passed a law in 1937 prohibiting the smoking and possession of marijuana in America, today millions of Americans still smoke it. There are a number of reasons why people smoke marijuana. Studies have shown that many Americans who are considered law abiding use the drug to get “high”. However, there are other people who use the drug as a medication to ease their suffering from diseases such as Cancer, Insomnia, chronic pains and aches, and Aids. Although marijuana has been legalized in some states for medical functions, the federal government still considers the drug as illegal to import, cultivate, possess, consume, or sell.
One interesting perspective on marijuana is the notion that, despite claims to the contrary, marijuana carries no more severe side effects or addictive qualities than tobacco or alcohol. What’s more, tobacco and alcohol have been proven to cause certain cancers and health defects, whereas marijuana has no substantiated claims of causing illness in people. By this rationale, it should be the legal drug, and alcohol and tobacco should be prohibited. However, since they are considered “socially acceptable,” they are exempt from this kind of punishment.
Despite that fact, it is ironic that marijuana has been illegal in a nation where the use of Tobacco is rampant. Tobacco is also a drug that kills millions of people every year from lung cancer while alcohol, another drug which causes serious injuries.
The government uses a lot of revenue in fighting against marijuana, finding the smokers, housing them in jails, prosecuting them in courts. We can see that the outlawing of cannabis has not achieved its desired goals. "The number of individuals who reported marijuana use in national surveys increased modestly from 19.2 million in 1991 to 21 million in 2001" (Gettman, 2). So the time has come to change this law. Marijuana should be legalized because the legalization will bring economic benefits, such as tax revenue, creation a new jobs, and money which used to fight with marijuana smokers also can be saved.
Statistics from other nations can be used to emphasize the financial benefits that can be gained in taxation and legalization of marijuana. For example, resources which are used by law enforcers in arresting people possessing and using marijuana can be directed into other areas such as combating real crime. Another way that the economy would be assisted is that the government will be able to collect tax from the growers and other people using marijuana. On the other hand, less people will go to jail and hence they will be productive and contribute to the economy of the country. One of the decisions which are important is to study the effect that legalization of marijuana will have on the economy at large.
In this paper, we will examine the financial and economic incentives for legalizing marijuana, as it is believed that this action would open up an entire new industry that is in high demand, creating plenty of new jobs and softening the budgets of law enforcement and criminal justice organizations.
Revenue from taxation of marijuana
Legalizing marijuana will increase revenues collected by taxation of marijuana products.
If we compare marijuana to alcohol, we can see that alcohol is none less dangerous for the health than marijuana. Furthermore, alcohol products even worse, because they can cause people addiction to it. However, the government legalized alcohol though it increased taxes on alcohol drinks. Today, the government collects billions of dollars from the taxes on alcohol production. This also can be done to marijuana. Suppose the government substitutes the high profits with a tax enforced on marijuana cigars. For instance, if the government taxed $7 per marijuana cigarette, it could end up collecting over 2 billion dollars on sales. Nonetheless, the government loses this money since they cannot collect tax on the illegal marijuana while it is still being imported, sold, and distributed across the country. Also, more money can be collected from an export tax.
The taxation of marijuana would result in a large amount of revenue coming in to state and federal governments. First off, the government could levy a tax on marijuana production. If marijuana were legal, growers could get federal subsidies to grow marijuana on their own fields. The sale of this marijuana would have a sales tax added to it, which went to the federal government. Secondly, an export tax on marijuana production could bring in more money when it is sent to other countries. The demand would be high, as quality control would be much higher than normal, and customers would trust a process that has been verified and supervised by a regulatory committee like the Food and Drug Administration.
The primary reason that marijuana legalization has been so opposed is merely due to conflicting sensibilities, and anti-drug propaganda spreading misinformation about marijuana being a gateway drug to even harder, actually dangerous drugs such as cocaine or heroin. However, there is a vibrant pot culture and audience for this specific drug which often seeks out no others – there are thousands, if not millions, of people who smoke pot in the United States alone, and seek it out for recreational use. Therefore, if pot were to be legalized, there is a built in audience that would be ready to receive the new product.
What’s more, the fact that it recently became legal, simplifying the buying and distribution process, would even create more pot smokers, as many likely do not have the resources or connections to get marijuana illegally, but they would like to try it. Therefore, the market could only grow – one of the few things preventing people from taking up pot is the illicit nature of it. With it being legal, there is little stopping those who were reticent before from trying it. That is an entirely new demographic to consider, in addition to those who already smoke. The entire industry would boom, as it would then become acceptable to smoke pot. More people would buy, and therefore more money would pour into the state coffers.
The state of California has already experienced massive success with the legalization of pot, as it has generated billions of dollars in revenue for the state. The legalization of marijuana for medicinal purposes has spawned a bull market of legal marijuana shops and distributors which are all meeting very good business within the state. If the rest of the country were to follow suit, the federal government would have an additional revenue stream which they could use to lower the federal deficit and offset expenditures. (Vitiello 2009)
The same arguments that are attributed to marijuana usage – that it is addictive, that it may be hazardous to a person’s health – can also be said of legalized drugs such as alcohol and tobacco. The most interesting difference between those two drugs and marijuana are their social acceptability – societal and cultural factors are the only things that make marijuana distasteful to the American people at large. If these biases against the drug were removed and proper education on the relative safety of marijuana was exercised, it would be far easier for the whole of American society to accept marijuana as quickly as tobacco and alcohol.
Creation of jobs
Unemployment is skyrocketing in America due to the current economic recession; people are looking for jobs everywhere they can. With the legalization of marijuana, an entirely new industry would be spawned, creating tens of thousands of jobs in said industry and employing all of those Americans who are searching anywhere they can for work. Growers, distributors, manufacturers, and many more would be searching for employees, and there is a workforce out there to provide these services. It would solve a huge problem within the American economy in that respect, and the industry could be fully staffed at any point in time.
People would be needed to run virtually every aspect of the cannabis industry – growing, distributing, creating, developing, etc. There would be no shortage of diverse positions available to those who desire the work and can do the job properly – the nearly 10% unemployment rate would soon drop rapidly due to the entirely new marijuana industry that would crop up. As indoor growing is incredibly difficult compared to outdoor growing, large outdoor farms would be created to meet the high demand for marijuana products from legitimate distributors. Workers would need to be brought on to tend those fields.
Revenue from marijuana cultivation and production
Along with creation of jobs and industries, farm lands would also be needed for the cultivation of the weed and laborers for the distribution of it to various pharmaceutical companies and retailers. This will be of a great economic impact to the farmers who grow it and improve the country’s infrastructure by constructing factories that will manufacture the drug. Cultivation of marijuana without tax will give already fifty five percent of profit.
The farmland that would be used to grow the marijuana would be highly sought after by marijuana distributors and retailers, creating a seller’s market for those farmers who would wish to lease out their land for the growing of pot. They would charge top dollar for the chance to be a part of this lucrative industry, and thusly the farmers would profit and the pot manufacturers would as well. Transporting the marijuana to its various distribution points would also require a lot of manpower; legalizing marijuana would allocate more jobs to this particular field, giving them the scope they need to sell their wares wherever they need.
Pharmaceutical companies would start releasing product lines and open up new departments for research and development, and wholly new companies would start up to meet the demand for legal marijuana that would arise. Marijuana production would also create new jobs, as farmhands would need to be hired to raise the crop. As factories are constructed for the manufacture and shipment of marijuana products, people will be needed to fill those job positions as well – even working on the line will enable people to be employed, which is yet another advantage of this proposal.
Marijuana could be sold at retailers and specialty shops throughout the country – the potential is there to create hundreds, if not thousands, of new cannabis-related products, each one fitting a specific market or section of the pot-desiring audience. Niche marketing and a widespread product line would allow a semblance of choice for people to pick their products, thereby allowing for a means to reach the largest audience possible. That sort of diversification would result in incredible profits for the retailer, the manufacturer, and the distributor alike.
Saving from criminal justice system
At the same time, the government could save a huge amount of money which is being used for fighting with marijuana smokers, in terms of court proceedings, keeping marijuana offenders in jail.
A large portion of the money is spent on the war with marijuana smokers, because of its prohibition. If marijuana will be legal, less people will go to jail and hence they will be productive and contribute to the economy of the country. It will reduce overcrowded prison population and save another billion dollars. The saved money can be used to improve the health care, education and other vital services.
The legalization of marijuana would also lessen the burden of an increasingly taxed and exhausted criminal justice system. Currently, the prison system is extremely flawed, creating a cycle of repeat offenders due to a prison culture that demands that people become tougher than they may have been before in order to survive, no matter what offense got them in prison in the first place. Prisons are also overcrowded due to unnecessarily tough sentences on subjectively minor crimes such as pot possession, in order for judges and political officials to seem “tough on crime.”
These convicted felons, who are guilty of nothing more than seeking out the use of marijuana and may not have been involved in other criminal affairs, are then introduced into the prison system. Threats of violence and rape are common in many federal prisons, and as a result inmates have to resort to violent measures in order to make it through in one piece. This turns ordinarily innocent people into violent criminals through the prison system itself, leaving them wholly incapable of dealing with the outside world by the time they get out. Their ability to get jobs, most importantly, would be affected due to their status as an ex-convict.
With the legalization of marijuana, those people who would otherwise get arrested or sentenced to jail time for the possession or sale of marijuana would not have to go through the prison system, if that was their only crime. This allows otherwise normal, productive members of society to stay that way – working, shopping, and contributing to the economy. Not only that, it would save the justice system billions of dollars in court fees and time spent on marijuana possession cases, resources which could then be used to track down real criminals and those who are actively working against the country’s best interests.
Law enforcement budgets could subsequently be used to greater effect, and the time and substantial money typically allocated to marijuana busts would be saved. Overcrowded prisons would also be relieved a great deal by the reduced intake of minor felons. More money could be saved by reducing the scope of anti-drug programs throughout the nation – the fewer number of drugs are targeted, the fewer resources are needed to conduct these programs. The drug prevention programs could then allocate that time and money to fighting cocaine, heroin, and much harder, more dangerous drugs that are still illegal. It is also clear that marijuana prevention is hardly effective, given the millions of people who still smoke it illegally every single day in America.
In summary, the legalization of marijuana has the potential to solve a great many problems for the American economy. It can shift the amount of money people are spending on an illegal and non-taxed commodity to a taxed and regulated product that brings in federal and state tax revenue with each purchase. It is likely that more than $2 billion a year could be earned if marijuana were given a reasonable tax rate, at the rate it is being sold today. What’s more, government regulation will allow the product to be checked for quality control and maximum effectiveness, so the government can control the drug that is being distributed to the people.
There is a 55% profit margin for the cultivation of marijuana; that kind of money simply cannot be overlooked. The criminal justice system could experience a vast, sweeping expansion in its budget, as overcrowded prisons will have a smaller proportion of nonviolent offenders, and the whole of society can benefit from those whose work lives are not interrupted by jail time. The number of jobs that are available will skyrocket, as an entirely new industry will have to be staffed. The debate over the legalization of marijuana has raged on for more than a century. In light of these facts, however, it is in the country’s and the economy’s best interest to legalize marijuana – it provides the money and the jobs required to keep our country going for centuries to come.
Caulkins, Jonathan P. “Estimated Cost of Production for Legalized Cannabis”. July, 2010. Working Paper. Rand Drug Policy Research Center. Print.
Caulkins gives estimated cost for growing marijuana in three ways: indoor growing, outdoor growing and indoor “hobbyist” growing. He concluded that it is much cheaper to grow marijuana on outdoor space. Consequently, if marijuana would be legal and it would be a marijuana industry, the price on this product would be much cheaper. It is an economic benefit for legalizing pot. Caulkins also gives the estimated salary for marijuana growers.
Easton, Stephen. "Marijuana growth in British Columbia" Public Policy Sources. May, 2004. Print.
Easton describes the cultivation and production of marijuana in British Columbia. The revenue from taxation of marijuana brings over two billion dollars to Canadian government yearly. There are the data of retail purchase prices by quantity of purchase, which gives some idea of the value of marijuana. The most useful part for my paper was the calculation of Vancouver grow-ops, which describes how much it costs to grow a 100 plants of marijuana, and how much profit we can make from it.
Gettman, Jon. "Marijuana in New York". The Bulletin of Cannabis Reform. November 5, 2009. Drugpolicy.org. Web. March 7, 2011 <http://drugpolicy.org/docUploads/Gettman_MJ_Usage_in_NYC_Arrests_Usage_and_Related_Data_Novmeber_2009.pdf>
"Marijuana in New York" by Jon Gettman was one of the most useful source for my paper. Gettman gives the information about the estimated cost of outlawing marijuana. The criminal justice system in New York cost 15.97 billion dollars for 2006, which includes state, county and local costs. From this amount of money 762 million dollars were spent on decriminalization of small amounts of marijuana. Then Gettman compares the prohibition of marijuana with prohibition of alcohol, and how the alcohol law can be apply on marijuana. Also he mentions that there is an opportunity of revenue from marijuana sales, manufacture and distribution. But now all of this money taken by illegal market.
Nadelmann, Ethan. "An End To Marijuana Prohibition" National Review. July 12, 2004. Print.
Nadelmann states that forty two percent of americans want marijuana to be legal. There is an interesting point of view on economic benefits from legalization of marijuana in the article. “Federal government has spent billions of dollars on advertisement and anti-drug programs that preach the dangers of marijuana.” So this money can be also saved. I am still thinking how to put this information into my paper.
Vitiello, Michael. “Legalization Marijuana: California’s pot of gold?” Selected Works. September, 2009. Print.
Michael Vitiello versus the benefits of legalization marijuana to the detriment of its legalization. He tells about revenue from taxation of marijuana,which can balanced the state budgets. Another benefit is the prison savings. There are thousands of people in prison because of urine tests indicating marijuana use. There are also other benefits, such as spinoff industries: coffeehouses, tourism, and industrial hemp. These industries would bring a lot of jobs.